CASE 26 When International Buyers and Sellers
Disagree
No matter what line of business you’re in, you can’t escape sex. That
may have been one conclusion drawn by an American exporter of
meat products after a dispute with a German customer over a ship-
ment of pork livers. Here’s how the disagreement came about.
The American exporter was contracted to ship “30,000 lbs. of
freshly frozen U.S. pork livers, customary merchantable quality,
first rate brands.” The shipment had been prepared to meet the ex-
acting standards of the American market, so the exporter expected
the transaction to be completed without any problem. But when
the livers arrived in Germany, the purchaser raised an objection:
“We ordered pork livers of customary merchantable quality—what
you sent us consisted of 40 percent sow livers.”
“Who cares about the sex of the pig the liver came from?” the
exporter asked.
“We do,” the German replied. “Here in Germany we don’t pass
off spongy sow livers as the firmer livers of male pigs. This ship-
ment wasn’t merchantable at the price we expected to charge. The
only way we were able to dispose of the meat without a total loss
was to reduce the price. You owe us a price allowance of $1,000.”
The American refused to reduce the price. The determined re-
sistance may have been partly in reaction to the implied insult to
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the taste of the American consumer. “If pork livers, whatever the
sex of the animal, are palatable to Americans, they ought to be
good enough for anyone,” the American thought.
It looked as if the buyer and seller could never agree on eating
habits.
QUESTIONS
1. In this dispute, which country’s law would apply, that of the
United States or of Germany?
2. If the case were tried in U.S. courts, who do you think would
win? In German courts? Why?
3. Draw up a brief agreement that would have eliminated the
following problems before they could occur:
a. Whose law applies.
b. Whether the case should be tried in U.S. or German courts.
c. The difference in opinion as to “customary merchantable
quality.”
4. Discuss how SRC may be at work in this case.
8/27/10 2:05 PM